As part of our Center’s special pension Task Force, Eileen Norcross from the Mercatus Center, followed up on her recent report by publising an OpEd that appeared in the Nov. 17 Providence Journal, and co-authored by Benjamin VanMetre.
Even with reform, R.I. outlook alarming
by EILEEN NORCROSS and BENJAMIN VanMETRE
FALLS CHURCH, Va. – The heated debate over how to fix Rhode Island’s pension system — with votes in the General Assembly scheduled for today — begins with a basic question: Just how big are public-sector pension promises?
According to the state’s numbers, Rhode Island is facing a daunting $9.3 billion in unfunded liabilities, and there is no money set aside to pay for them. Unfortunately, like all public-sector plans in the country, the picture is actually much worse. Rhode Island’s unfunded pension liabilities are nearly twice that size, closer to $18 billion — and that’s on the lower end of estimates.
Rhode Island, like many other state and local governments, misses the mark on calculating its pension liabilities because they are being valued as though they are risky bets instead of a government-guaranteed benefit.
This miscalculation comes from poor government accounting rules …